June 30, 2013

Allegiant Air a small wonder of airline world

Rather than compete with major carriers, the airline uses its marketing muscles to convince people in small cities, like Bangor, to fly to sunny vacation spots.

By SCOTT MAYEROWITZ The Associated Press

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An Allegiant Air jetliner flies by the Luxor Resort & Casino after taking off from McCarran International Airport in Las Vegas. While other U.S. airlines have struggled with the ups and downs of the economy and fuel prices, tiny Allegiant Air has been profitable for 10 straight years.

Photos by The Associated Press

Chris Killian
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Allegiant Air flight attendant Chris Killian prepares passengers for the flight from Las Vegas to Laredo, Texas. The airline has low fares but tacks on many fees.

Additional Photos Below


Among Allegiant Air's 87 destinations:

Allentown Pa.; Bangor, Maine; Bentonville, Ark.; Boise, Idaho; Bozeman, Mont.; Casper, Wyo.; Cedar Rapids, Iowa; Duluth, Minn.; Elmira, N.Y.; Eugene, Ore.; Grand Forks, N.D.; Great Falls, Mont.; Greens- boro, N.D.; Huntington, W.Va.; Knoxville, Tenn.; Lansing, Mich.; Laredo, Texas; Maui, Hawaii; McAllen, Texas; Moline, Ill.; Monterey, Calif.; Newport News, Va.; Niagara Falls, N.Y.; Ogden, Utah; Punta Gorda, Fla.; Rapid City, S.D.; Shreveport, La.; Toledo, Ohio; Wichita, Kan.; Youngstown, Ohio.

To book a trip by phone, Allegiant charges $50 for each roundtrip ticket. To book online costs $20 for each roundtrip ticket. The only way to avoid the fees is to purchase tickets at the airport, something fewer than 3 percent of its customers did last year.

But whether you book by phone, Internet or in person, paying with a credit card costs an extra $8.

Placing a suitcase in an overhead bin is $10 to $25. Boarding passes signify who has paid the fee. If passengers show up at the airport with a large carry-on bag and haven't prepaid the fee, the airline penalizes them an additional $25 to $50, depending on the route.

But what really makes Allegiant different are the commissions it earns from selling hotel rooms, rental cars and other extras including Everglades boat tours and theme-park tickets. It even gets people to attend timeshare sales presentations. Before a passenger can finalize a ticket purchase online, they must click through page after page offering them these add-ons.

Last year, revenue from commissions totaled $36 million, or nearly $12 per roundtrip passenger.

"I don't think of them as an airline. I think of them as a travel company," said Helane Becker, an airline analyst at Cowen Securities.

Once onboard, Allegiant passengers are again bombarded with sales pitches. On a recent flight from Cedar Rapids to Las Vegas, flight attendants came over the loudspeaker and hawked show tickets and airport shuttles. The in-flight magazine is filled with ads for shows and attractions instead of stories. One ad offers $30 off a Las Vegas helicopter tour if purchased from flight attendants, who are paid extra for each item sold.

"They do a fantastic job packaging," said JetBlue CEO David Barger. "I think we can learn a lot from what Allegiant does."

Ben Baldanza, CEO of Spirit Airlines -- the only other U.S. carrier to charge for overhead bin space or for booking over the Internet -- also respects Allegiant's ability to sell extras, such as a round of golf in Myrtle Beach, S.C.

"They developed that expertise earlier than we did," Baldanza said.

Spirit focuses on getting passengers between big cities cheaply; Allegiant taps into people's desire to escape small-town life for a few days.

Most airlines promote their new first-class seats or individual TV screens. Allegiant -- which only offers coach seats -- promotes its destinations: Las Vegas gamblers smiling after winning at roulette, a hot-air balloon floating over the Arizona desert or a woman in a bikini sipping a frozen drink on a Hawaiian beach.

Allegiant's passengers aren't sold on the airline but on the escape.

An hour and a half before the flight from Cedar Rapids to Las Vegas, a spare seat couldn't be found in the airport bar. It was only 11 a.m., but travelers like Bridget Estrada and her four friends were too excited for their trip to wait.

It was only Estrada's second trip on a plane and her first in 13 years. She was nervous and gave a quick thought to her husband and three kids at home. But she and her friends quickly got back to drinking hard lemonade, mapping out their weekend away from Iowa.

A few feet away, other passengers shared tips on attractions, buffets and the cheapest blackjack tables.

"You must see the pirate show," one insisted.

Allegiant finds ways to profit on routes other airlines couldn't make work, often swooping in after they pull out. This month, it started flying between Asheville, N.C., and Tampa, Fla., a route abandoned by AirTran after Southwest Airlines acquired it.

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Additional Photos

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A ground worker guides an incoming Allegiant Air jet at McCarran International Airport in Las Vegas. Allegiant promotes its destinations, rather than itself, to those who seldom fly.


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